Question 3 Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions were recorded: 1. On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021. II. On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward contract) to buy ¥500,000 on April 1, 2021. II. On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled. IV. The spot rates and the forward rates were as follows: Date Spot rate Forward rate for delivery (¥) on April 1, 2021 December 1, 2020 $0.0084 $0.0089 December 31, 2020 0.0083 0.0088 April 1, 2021 0.0092
Question 3 Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions were recorded: 1. On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021. II. On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward contract) to buy ¥500,000 on April 1, 2021. II. On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled. IV. The spot rates and the forward rates were as follows: Date Spot rate Forward rate for delivery (¥) on April 1, 2021 December 1, 2020 $0.0084 $0.0089 December 31, 2020 0.0083 0.0088 April 1, 2021 0.0092
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
REQUIRED
- Prepare the
journal entries for the settlement of the contracts on April 1, 2021. - What is the value of the forward contract?
![Question 3
Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions
were recorded:
On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a
I.
Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021.
On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward
II.
contract) to buy ¥500,000 on April 1, 2021.
On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled.
The spot rates and the forward rates were as follows:
III.
IV.
Date
Spot rate
Forward rate
for delivery (¥) on April 1, 2021
December 1, 2020
$0.0084
$0.0089
December 31, 2020
0.0083
0.0088
April 1, 2021
0.0092](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F486c3acc-a624-4f32-a451-67c53e2f625c%2Fa2ad40ba-b44f-4723-8cf1-a97f83712116%2Fns9daa_processed.png&w=3840&q=75)
Transcribed Image Text:Question 3
Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions
were recorded:
On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a
I.
Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021.
On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward
II.
contract) to buy ¥500,000 on April 1, 2021.
On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled.
The spot rates and the forward rates were as follows:
III.
IV.
Date
Spot rate
Forward rate
for delivery (¥) on April 1, 2021
December 1, 2020
$0.0084
$0.0089
December 31, 2020
0.0083
0.0088
April 1, 2021
0.0092
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